UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended April 30, 2004
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ___________________
Commission File Number 0-944
POSSIS MEDICAL, INC.
(exact name of registrant as specified in its charter)
Minnesota 41-0783184
- --------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation organization)
9055 Evergreen Blvd NW Minneapolis MN 55433-8003
- ----------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
783-780-4555
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes _X_ No ___
The number of shares outstanding of the Registrant's Common Stock, $.40 par
value, as of June 1, 2004 was 18,163,963.
1
POSSIS MEDICAL, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements. . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets, April 30, 2004 and
July 31, 2003 . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income and Comprehensive
Income for the three and nine months ended April 30, 2004
and 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the nine months
ended April 30, 2004 and 2003 . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements. . . . . . . . . . . 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 10
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk. . . 18
ITEM 4. Controls and Procedures. . . . . . . . . . . . . . . . . . . . 18
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . 19
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2
PART 1 FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
POSSIS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
April 30, 2004 July 31, 2003
-------------- ---------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 7,347,684 $ 4,782,942
Marketable securities. . . . . . . . . . . . . . . . . . . 34,618,708 27,161,223
Trade receivables (less allowance for doubtful
accounts and returns of $551,000 and $507,000,
respectively) . . . . . . . . . . . . . . . . . . . . . . 9,907,696 7,966,394
Inventories . . . . . . . . . . . . . . . . . . . . . . . . 5,187,605 4,165,253
Prepaid expenses and other assets. . . . . . . . . . . . . 606,296 729,936
Deferred tax asset . . . . . . . . . . . . . . . . . . . . 806,000 806,000
-------------- ---------------
Total current assets. . . . . . . . . . . . . . . . . . 58,473,989 45,611,748
PROPERTY AND EQUIPMENT, net 4,265,057 3,055,335
OTHER ASSETS
Deferred tax assets . . . . . . . . . . . . . . . . . . . . 14,469,970 19,098,000
Other assets. . . . . . . . . . . . . . . . . . . . . . . . 204,285 -
-------------- ---------------
TOTAL ASSETS $ 77,413,301 $ 67,765,083
============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable. . . . . . . . . . . . . . . . . . . $ 2,632,825 $ 1,585,776
Accrued salaries, wages, and commissions. . . . . . . . . . 2,647,438 2,777,189
Other liabilities . . . . . . . . . . . . . . . . . . . . . 2,227,414 2,367,645
-------------- ---------------
Total current liabilities. . . . . . . . . . . . . . . 7,507,677 6,730,610
OTHER LIABILITIES 82,480 -
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock-authorized, 100,000,000 shares of
$0.40 Par value each; issued and outstanding,
18,067,162 and 17,757,531 shares, respectively. . . . . . 7,226,865 7,103,013
Additional paid-in capital . . . . . . . . . . . . . . . . 84,280,222 83,743,496
. . . . . .
Unearned compensation . . . . . . . . . . . . . . . . . . . (24,000) (15,000)
. . .
Accumulated other comprehensive loss. . . . . . . . . . . (104,000) (100,000)
Retained deficit. . . . . . . . . . . . . . . . . . . . . . (21,555,943) (29,697,036)
-------------- ---------------
Total shareholder's equity. . . . . . . . . . . . . . . 69,823,144 61,034,473
-------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY. . . . . . . . . . $ 77,413,301 $ 67,765,083
============== ===============
See notes to consolidated financial statements.
3
POSSIS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED APRIL 30, 2004 AND 2003
(UNAUDITED)
Three Months Ended Nine Months Ended
----------------------------------- -------------------------------
April 30, April 30, April 30, April 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Product sales $19,329,399 $14,625,124 $52,380,364 $41,628,687
Cost of sales and other expenses:
Cost of medical products. . . . . . . . . . 4,781,377 3,580,780 12,567,753 10,823,239
Selling, general and administrative. . . . 7,379,482 5,986,002 20,753,549 17,325,421
Research and development . . . . . . . . . 2,408,544 2,228,722 6,514,655 4,920,303
------------- ------------- ------------- -------------
Cost of sales and other expenses. 14,569,403 11,795,504 39,835,957 33,068,963
------------- ------------- ------------- -------------
Operating Income 4,759,996 2,829,620 12,544,407 8,559,724
Interest income. . . . . . . . . . . . . . . 197,748 91,910 518,670 219,626
Loss on sale of securities. . . . . . . . . - - (34,033) -
------------- ------------- ------------- -------------
Income before income taxes . . . . . . . . . . . 4,957,744 2,921,530 13,029,044 8,779,350
Provision for income taxes. . . . . . . . . . . . 1,862,051 1,097,000 4,887,951 3,294,000
------------- ------------- ------------- -------------
Net income. . . . . . . . . . . . . . . . . . . . 3,095,693 1,824,530 8,141,093 5,485,350
Other comprehensive income (loss), net of tax:
Unrealized (loss) gain on securities . . . . (155,000) 63,170 (4,000) 63,170
------------- ------------- ------------- -------------
Comprehensive income. . . . . . . . . . . . . . . $ 2,940,693 $ 1,887,700 $ 8,137,093 $ 5,548,520
============= ============= ============= =============
Weighted average number of common of
Shares outstanding:
Basic . . . . . . . . . . . . . . . . . 18,002,188 17,598,413 17,850,256 17,409,645
Diluted . . . . . . . . . . . . . . . . 19,791,622 19,159,942 19,397,477 18,807,439
Net income per common share:
Basic . . . . . . . . . . . . . . . . . $0.17 $0.10 $0.46 $0.32
============= ============= ============= =============
Diluted . . . . . . . . . . . . . . . . $0.16 $0.10 $0.42 $0.29
============= ============= ============= =============
See notes to consolidated financial statements.
4
POSSIS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED APRIL 30, 2004 AND 2003
(UNAUDITED)
2004 2003
------------ ------------
OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,141,093 $ 5,485,350
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,304,988 1,589,487
Gain on asset disposal . . . . . . . . . . . . . . . . . . . . . . . . . (52,318) (343)
Stock compensation expense . . . . . . . . . . . . . . . . . . . . . . . 132,646 138,927
Loss on sale of marketable securities. . . . . . . . . . . . . . . . . . 34,033 -
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,631,030 3,029,318
Increase in trade receivables . . . . . . . . . . . . . . . . . . . . . . (1,941,302) (1,276,122)
Increase in inventories. . . . . . . . . . . . . . . . . . . . . . . . . (1,452,352) (745,575)
(Increase) decrease in prepaid expenses and other assets . . . .. . . . . (80,645) 95,326
Increase in trade accounts payable . . . . . . . . . . . . . . . . . . . 1,047,049 83,810
(Decrease) in accrued and other liabilities . . . . . . . . . . . . . . . (187,502) 786,832
------------ ------------
Net cash provided by operating activities. . . . . . . . . . . . . . 11,576,720 9,187,010
INVESTING ACTIVITIES:
Additions to property and equipment . . . . . . . . . . . . . . . . . . . (2,087,502) (896,487)
Proceeds from sale of fixed assets. . . . . . . . . . . . . . . . . . . . 55,110 41,357
Proceeds from sale of marketable securities . . . . . . . . . . . . . . . 17,004,534 -
Purchase of marketable securities . . . . . . . . . . . . . . . . . . . . (24,503,052) (23,079,488)
------------ ------------
Net cash used in investing activities. . . . . . . . . . . . . . . . (9,530,910) (23,934,618)
FINANCING ACTIVITIES:
Proceeds from issuance and exercise of options and warrants . . . . . . . 5,538,948 4,758,723
Repurchase of common stock . . . . . . . . . . . . . . . . . . (5,020,016) (1,641,404)
------------ ------------
Net cash provided by financing activities . . . . . . . . . . . . . . 518,932 3,117,319
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . 2,564,742 (11,630,289)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD. . 4,782,942 18,556,663
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD. . . . . . . . $ 7,347,684 $ 6,926,374
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . $ 153,900 $ -
Issuance of restricted stock . . . . . . . . . . . . . . . . . . . . . . . 36,000 36,000
Inventory transferred to property and equipment. . . . . . . . . . . . . . - 47,951
See notes to consolidated financial statements.
5
POSSIS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
accounting principles generally accepted in the United States of America
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. The accompanying consolidated
financial statements and notes should be read in conjunction with the
audited financial statements and accompanying notes thereto included in the
Company's 2003 Annual Report.
2. STOCK OPTIONS
Pursuant to Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation, we apply the recognition and
measurement principles of Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, to our stock options and other
stock-based compensation plans.
In accordance with APB Opinion No. 25, compensation cost for stock options
is recognized in income based on the excess, if any, of the quoted market
price of the stock at the grant date of the award or other measurement date
over the amount an employee must pay to acquire the stock. The exercise
price for stock options granted to employees equals the fair market value
of our common stock at the date of grant, thereby resulting in no
recognition of compensation expense.
The following table illustrates the effect on net income and earnings per
share if we had applied the fair value recognition provisions of SFAS No.
123 to stock-based employee compensation.
Three Months Ended Nine Months Ended
------------------------------ -----------------------------
April 30, April 30, April 30, April 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Net Income - as reported . . . . . . . . . . . . $ 3,095,693 $ 1,824,530 $ 8,141,093 $ 5,485,350
Less estimated stock-based
Employee compensation determined under
fair value based
method, net of tax. . . . . . . . . . . (1,495,000) (733,000) (2,796,000) (2,309,000)
------------ ------------ ------------ ------------
Net income - pro forma. . . . . . . . . . . $ 1,600,693 $ 1,091,530 $ 5,345,093 $ 3,176,350
============ ============ ============
Earnings per share:
Basic - as reported. . . . . . . . . . . . $ 0.17 $ 0.10 $ 0.46 $ 0.32
Less estimated stock-based
Employee compensation determined under
fair value based
method, net of tax. . . . . . . . . . . (0.08) (0.04) (0.16) (0.14)
------------ ------------ ------------ ------------
6
------------ ------------ ------------ ------------
Basic - pro forma . . . . . . . . . . . . . $ 0.09 $ 0.06 $ 0.30 $ 0.18
============ ============ ============ ============
Diluted - as reported $ 0.16 $ 0.10 $ 0.42 $ 0.29
Less estimated stock-based
Employee compensation determined under
fair value based method, net of tax. . . (0.08) (0.04) (0.14) (0.12)
------------ ------------ ------------ ------------
Diluted - pro forma. . . . . . . . . . . . . $ 0.08 $ 0.06 $ 0.28 $ 0.17
============ ============ ============ ============
Weighted average common shares
outstanding
Basic. . . . . . . . . . . . . . . . . 18,002,188 17,598,413 17,850,256 17,409,645
Diluted. . . . . . . . . . . . . . . . 19,791,622 9,159,942 19,397,477 18,807,439
We estimated the fair values using the Black-Scholes option-pricing model,
modified for dividends and using the following assumptions:
2004 2003
-------------- -------------
Risk-free rate . . . . . . . . . . . . . . 3.9-4.6% 3.6-4.3%
Expected dividend yield . . . . . . . . . . 0% 0%
Expected stock price volatility. . . . . . 58-64% 70-80%
Expected option term . . . . . . . . . . . 10 years 10 years
Fair value per option. . . . . . . . . . . $11.38-20.22 $7.52-15.75
For purposes of determining the pro forma amounts, the fair value of
options is amortized to expense over the option-vesting period in
determining the pro forma impact. The option-vesting period is six months
to four years.
3. INTERIM FINANCIAL STATEMENTS
Operating results for the three and nine month periods ended April 30, 2004
are not necessarily indicative of the results that may be expected for the
year ending July 31, 2004.
4. ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN
No. 46"), an interpretation of Accounting Research Bulletin No. 51,
"Consolidated Financial Statements." FIN No. 46 prescribes how to identify
variable interest entities and how an enterprise assesses its interests in
a variable interest entity to decide whether to consolidate that entity.
This interpretation requires existing unconsolidated variable interest
entities to be consolidated by their primary beneficiaries if the entities
do not effectively disperse risks among parties involved. FIN 46 was
scheduled to be effective for variable interest entities created after
January 31, 2003. On December 24, 2003, the FASB published a revision to
FIN No. 46 ("FIN No. 46( R )"). FIN No. 46(R) clarifies certain provisions
of FIN No. 46 and exempts certain entities from its requirements. For
interests in variable interest entities acquired prior to January 31, 2003,
the provisions of FIN No. 46(R) will be applied on March 31, 2004. The
Company does not anticipate that the adoption of FIN No. 46 and FIN No.
46(R) will result in the Company consolidating variable interest entities
or providing disclosures on variable interest entities.
7
In November 2002, the Emerging Issues Task Force (EITF) reached a consensus
on Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables,"
which provides guidance on how to account for arrangements that involve the
delivery or performance of multiple products, services and/or right to use
assets. The provisions of EITF Issue No. 00-21 apply to revenue
arrangements entered into in fiscal periods beginning after June 15, 2003.
The adoption of EITF Issue No. 00-21 did not have an impact on the
Company's financial statement disclosures and did not have a material
effect on the Company's consolidated balance sheet, results of operations,
or cash flows.
5. MARKETABLE SECURITIES
During the quarter ended April 30, 2004, the Company invested its excess
cash and cash equivalents in a professionally managed portfolio of
marketable securities. All securities in this portfolio as of April 30,
2004 were classified as available-for-sale and consisted primarily of U.S.
government securities and corporate bonds. These investments are reported
at fair value, and the net unrealized loss of approximately $155,000 and
$4,000 respectively, net of tax, for the three and nine months ended April
30, 2004 is included within other comprehensive income. The net unrealized
loss included in shareholders' equity as of April 30, 2004 was $104,000,
net of tax.
6. INVENTORIES
Inventories are stated at the lower of cost (on the first-in, first-out
basis) or market. Inventory balances were as follows:
April 30, 2004 July 31, 2003
-------------- -------------
Finished goods . . . . . . . . . . . . . . $2,007,602 $1,866,397
Work-in-process . . . . . . . . . . . . . 1,246,988 884,451
Raw materials. . . . . . . . . . . . . . . 1,933,015 1,414,405
-------------- -------------
$5,187,605 $4,165,253
============== =============
7. PROPERTY AND EQUIPMENT
Property is carried at cost and depreciated using the straight-line method
over the estimated useful lives of the various assets. Property and
equipment balances and corresponding lives were as follows:
8
April 30, July 31,
2004 2003 Life
------------ ------------ -------------
Leasehold improvements . . . . . . . $ 1,611,554 $ 1,540,965 10 years
Equipment. . . . . . . . . . . . . . 8,898,540 7,148,702 3 to 10 years
Assets in construction. . . . . . . 740,605 503,722 N/A
------------ ------------
11,250,699 9,193,389
Less depreciation . . . . . . . . . (6,985,642) (6,138,054)
------------ ------------
Property and equipment - net. . . . $ 4,265,057 $ 3,055,335
============ ============
8. SEGMENT AND GEOGRAPHIC INFORMATION AND CONCENTRATION OF CREDIT RISK
The Company's operations are in one business segment: the design,
manufacture and distribution of cardiovascular medical devices. The Company
evaluates revenue performance based on the worldwide revenues of each major
product line and profitability based on an enterprise-wide basis due to
shared infrastructures to make operating and strategic decisions.
Total revenues from sales in the United States and outside the United
States are as follows:
Three Months Ended Nine Months Ended
April 30, 2004 April 30, 2003 April 30, 2004 April 30, 2003
------------------------------------------------------------
United States. . . . . . . . . . . . $18,898,765 $14,306,525 $51,217,024 $40,788,097
Non-United States. . . . . . . . . . 430,634 318,599 1,163,340 840,590
-------------- -------------- -------------- --------------
Total Revenues. . . . . . . . . . $19,329,399 $14,625,124 $52,380,364 $41,628,687
============== ============== ============== ==============
9. NET INCOME PER COMMON SHARE
Basic income per common share is computed by dividing net income for the
period by the weighted average number of common shares outstanding during
the period. Diluted income per share is computed using the treasury stock
method by dividing net income by the weighted average number of common
shares plus the dilutive effect of outstanding stock options, stock
warrants and shares issuable under the employee stock purchase plan.
10. COMMON STOCK
During the nine months ended April 30, 2004, stock options and warrants for
the purchase of 526,535 shares of the Company's common stock were exercised
at prices between $2.22 and $20.60 per share resulting in proceeds of
$5,165,000.
During the nine months ended April 30, 2004, the Company issued 24,612
shares in connection with its employee stock purchase plan.
9
During the nine months ended April 30, 2004, the Company issued 1,884
shares of restricted stock to the outside members of the Board of
Directors.
During the nine months ended April 30, 2004, the Company repurchased
243,400 shares in the public market at stock prices between $15.65 and
$27.78 per share for $5,020,000.
11. ACCRUED WARRANTY COSTS
The Company estimates the amount of warranty claims on sold product that
may be incurred based on current and historical data. The actual warranty
expense could differ from the estimates made by the Company based on
product performance. The following table presents the changes in the
Company's product warranty liability:
Accrued warranty costs at July 31, 2003 . . . . . $146,500
Payments made for warranty costs. . . . . . . . . (258,700)
Accrual for product costs . . . . . . . . . . . . 258,700
-------------
Accrued warranty costs at April 30, 2004. . . . . $146,500
=============
12. EXECUTIVE BENEFIT PLAN
Effective February 1, 2004 the Company entered into a Supplemental
Executive Retirement Deferred Compensation Agreement (SERP) with the
Company's Chief Executive Officer (CEO). The Agreement requires the Company
to establish an account on behalf of the CEO and to fund it yearly until
the CEO reaches 65 years of age or early retirement, whichever comes first.
The estimated yearly funding amount is $202,805 for seven years. The target
benefit is an annual benefit , for a ten year period, equal to one-half of
the CEO's Base Compensation at the time benefits become payable under the
SERP. Total compensation expense for the nine months ended April 30, 2004
is $81,000, which is included in selling, general and administrative
expenses. As of April 30, 2004 the asset of $204,000 and liability of
$82,000 relating to the SERP are included in the balance sheet under the
caption Other Assets and Other Liabilities.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Business
Possis Medical Inc. develops, manufactures and markets pioneering medical
devices for the large and growing cardiovascular and vascular treatment markets.
The AngioJet(R) Rheolytic(TM) Thrombectomy System (AngioJet System) is marketed
worldwide for blood clot removal from native coronary arteries, leg arteries,
coronary bypass grafts and AV dialysis access grafts. The AngioJet System
consists of a drive unit (capital equipment), which powers a disposable pump,
and a family of disposable catheters, each aimed at a specific indication.
10
The Company expanded its product line with the introduction of the XMI(R) Rapid
Exchange catheter (XMI RX) in December 2003 for the removal of blood blots in
peripheral arteries in a limited market release, the introduction of the AVX(TM)
catheter in July 2003 for the removal of blood clots in AV-access grafts and the
introduction of the Xpeedior(R) Plus 120 catheter in August 2002 to remove blood
clots in peripheral arteries greater than or equal to 3mm in diameter.
In February 2004, the Company released its XMI RX in a full market release for
peripheral arterial use in the U.S. In May 2004, the Company received approval
from the U.S. Food & Drug Administration (FDA) to market the XMI RX for coronary
indications. The Company also received Community Europe (CE) mark approval in
May 2004, allowing coronary marketing of the XMI RX in the European Community.
This new product will put our proven XMI technology into a configuration
preferred by many physicians, increasing our utility and acceptance in the
interventional lab.
The AVX catheter is an improved version of our Xpeedior 60 catheter and designed
specifically for the av-access market. The new AVX catheter is a slightly
shorter length catheter with a new hub design and hemostasis valve that is
easier to use. In addition, it is 25% more powerful than the Xpeedior 60,
putting more thrombectomy action in the hands of the physician. The Company's
Xpeedior Plus 120 catheter is an improved version of our Xpeedior 100. Compared
to the Xpeedior 100 catheter, the new Xpeedior Plus 120 catheter's increased
length will allow the physician to treat more distal vessels. The Xpeedior Plus
120 catheter also has the added features of dual marker bands, a braided shaft
and a sleek tapered tip for greater ease of use.
In addition to the Company's XMI RX and Xpeedior catheters, the XMI catheter and
XVG(R) (XVG) catheter continue to gain acceptance by physicians. The XVG, XMI,
XMI RX and Xpeedior catheters feature the Company's patented Cross-Stream(R)
Technology. This exclusive technology platform intensifies the action at the tip
of the catheter, which doubles the clot removal rate and triples the treatable
vessel size compared to other available mechanical thrombectomy devices on the
market today. In addition, Cross-Stream Technology has been able to deal more
effectively than previous catheters with "mural thrombus," the older, more
organized material that adheres to vessel walls and can complicate patient
results.
The Company employs a variety of flexible drive unit acquisition programs
including outright purchase and various evaluation programs. The Company has no
leasing programs for its capital equipment. The purchasing cycle for the
AngioJet System drive unit varies depending on the customer's budget cycle. The
Company has signed contracts with seven purchasing groups in order to accelerate
orders and increase market penetration. These purchasing groups evaluate and
screen new medical technologies on behalf of their members, and once they
recommend a technology, such as the AngioJet System, they negotiate
pre-determined discounts on behalf of their members. The benefit for the Company
is access to the recommended vendor list, along with marketing support provided
by the purchasing group. The purchasing groups receive a marketing fee on their
member purchases from the Company. These discounts and marketing fees have been
offset by the increase in sales to the member hospitals of the purchasing group.
There has been no material negative effect on the Company's margins due to these
discounts and marketing fees. The discounts reduce gross revenue on the income
statement, while marketing fees are included in selling, general and
administrative expense on the income statement.
In April 2004, the Company announced that is had signed a three year agreement
to be the exclusive distributor of the Angiometrx Metricath(TM) products in the
11
United States. The Metricath System is an innovative, catheter-based technology
that allows cardiologists to quickly and easily measure arterial size during
procedures for treatment of coronary artery disease. Such measurements are
helpful to select appropriately sized stents to achieve optimum patient
outcomes from coronary angioplasty and related stent implantation procedures.
The Metricath System was developed in response to the limitations of existing
measurement technologies, which require large capital investment and which do
not offer the ease of use of the Metricath System. The Metricath(TM) System
received FDA 510(k) clearance for sale in the United States in July 2003.
The Company expects U.S. AngioJet System sales to continue to grow primarily
through obtaining additional FDA approved product uses, introduction of new
catheter models for existing indications, introduction of AngioJet
System-related products, more face-time selling to existing accounts,
peer-to-peer selling, and the publication of clinical performance and
cost-effectiveness data.
Critical Accounting Policies
The consolidated financial statements include accounts of the Company and all
wholly-owned subsidiaries. The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions in certain circumstances
that affect amounts reported in the accompanying consolidated financial
statements and related footnotes. In preparing these financial statements,
management has made its best estimates and judgments of certain amounts included
in the financial statements, giving due consideration to materiality. The
Company's most critical accounting policies are those described below.
Application of these accounting policies involves the exercise of judgment and
use of assumptions as to future uncertainties and, as a result, actual results
could differ from these estimates.
Revenue Recognition
Revenues associated with products that are already maintained at customer
locations are recognized and ownership and risk of loss are transferred to the
customer when the Company receives a valid purchase order from the customer.
Revenues associated with products that are not maintained at the customer
locations are recognized and title and risk of loss are transferred to the
customer when a valid purchase order is received and the products are received
at the customer's location. Provisions for returns are recorded in the same
period the related revenues are recognized. Revenue from the sale of drive unit
extended warranties are recognized on a straight-line basis over the warranty
period.
Allowance for Returns
Accounts receivable are reduced by an allowance for items that may be returned
in the future. The allowance requires us to make estimates at the time the
account receivable is recorded concerning the likelihood for returns in the
future. The estimate is based upon historical experience, information received
from our customers and on assumptions that are believed to be reasonable under
the circumstances. Management, on a quarterly basis, evaluates the adequacy of
the allowance for returns. Management believes the amount of the allowance for
returns is appropriate; however, actual returns incurred could differ from the
original estimate, requiring adjustments to the allowance.
12
Allowance for Doubtful Accounts
Substantially all of the Company's receivables are due from health care
facilities located in the United States. The estimated allowance for doubtful
accounts is based upon the age of the outstanding receivables and the payment
history and creditworthiness of each customer. Management, on a quarterly basis,
evaluates the adequacy of the allowance for doubtful accounts. Management
believes the amount of the allowance for doubtful accounts is appropriate;
however, nonpayment of accounts could differ from the original estimate,
requiring adjustments to the allowance.
Inventories
Inventories are valued at the lower of cost or market. In order to determine the
market value of inventory on a quarterly basis, management assesses the
inventory quantities on hand to estimated future usage and sales and, if
necessary, writes down inventory deemed excess or obsolete to estimated market
value.
Warranty Reserve
The Company provides a one-year limited warranty on its AngioJet System drive
unit and a limited warranty on AngioJet System disposable products. The Company
establishes a warranty reserve at the time products are sold, which is based
upon historical frequency of claims relating to the Company's products and the
cost to replace disposable products and to repair drive units under warranty.
Management, on a quarterly basis, evaluates the adequacy of the warranty
reserve. Management believes the amount of the warranty reserve is appropriate,
given our historical experience; however, actual claims incurred could differ
from the original estimate, requiring adjustments to the reserve.
Results of Operations
Three and Nine Month Periods Ended April 30, 2004 and 2003
Total product sales for the three months ended April 30, 2004 increased
$4,704,000, or 32%, to $19,329,000 compared to $14,625,000 for the comparable
period in fiscal 2003. Total product sales for the nine months ended April 30,
2004 increased $10,751,000, or 26%, to $52,380,000 compared to $41,629,000 for
the comparable period in fiscal 2003. The Company recorded net income for the
quarter ended April 30, 2004 of $3,096,000, or $0.16 per diluted share, compared
to net income of $1,825,000, or $0.10 per diluted share, in the comparable
quarter in 2003. For the nine months ended April 30, 2004, the Company recorded
net income of $8,141,000 or $0.42 per diluted share, compared to net income of
$5,485,000, or $0.29 per diluted share, in the same period in 2003.
Revenue - AngioJet System
U.S. AngioJet System revenue for the three months ended April 30, 2004 increased
32% to $18,899,000 from $14,307,000 for the same period in 2003. U.S. AngioJet
System revenue for the nine months ended April 30, 2004 increased 26% to
$51,217,000 from $40,788,000 for the same period in 2003. The main factors in
the revenue increase were increased sales resulting from a one time drive unit
13
promotion with one of our group purchasing organizations, continuing customer
acceptance of our expanded and improved coronary and peripheral catheter product
lines and the expansion of our direct sales force.
As of April 30, 2004, the Company had a total of 1,255 domestic drive units in
the field, compared to 1,022 drive units at April 30, 2003, and 1,168 units as
of January 31, 2004. During the three month period ended April 30, 2004, the
Company's catheter sales increased approximately 26% to approximately 13,500
catheters versus approximately 10,700 catheters in the same prior year period.
During the nine month period ended April 30, 2004, the Company's catheter sales
increased approximately 24% to approximately 37,800 catheters versus
approximately 30,600 catheters in the same prior year period. The average
catheter utilization rate per installed domestic drive unit was 10.8 in the
third quarter of fiscal 2004, compared to a rate of 10.4 in the same prior year
period, and compared to a rate of 10.8 in the second quarter of fiscal 2004. The
Company sold 88 and 194 drive units during the three and nine months ended April
30, 2004, respectively, compared to 45 and 162 drive units in the same periods
in the prior year, respectively.
Foreign sales of the AngioJet System for the three and nine month periods ended
April 30, 2004 were $431,000 and $1,163,000, respectively. This compared to
foreign sales of the AngioJet System of $319,000 and $841,000, respectively, for
the same periods the previous year. The Company has recently expanded the sales
territory of one of its existing European distributors to expand product
penetration in Europe. Limited foreign sales are primarily due to cost
constraints in overseas markets. In European markets, where public sector funds
are more crucial for hospital operation, Euro devaluations generated higher
public sector deficits, which, in turn, forced reductions in hospital procedure
and equipment budgets. In Japan, the Company is pursuing a regulatory strategy
that utilizes the Company's U.S. coronary clinical trial results and extensive
body of published clinical studies, which is expected to result in regulatory
approval for the AngioJet System with the XMI catheter in treating coronary
thrombus. Currently, the Japanese Ministry of Health and Welfare (MHW) is
reviewing the Company's regulatory approval submission. Once the Company
receives regulatory approval, the Company will apply for an appropriate national
medical insurance reimbursement. The timing of the regulatory approval and
reimbursement decision is dependent upon the Japanese MHW response to the
Company's submissions.
Cost of Medical Products
Cost of medical products increased $1,201,000 to $4,781,000 in the three month
period ended April 30, 2004 compared to the same period in the previous year,
and increased $1,745,000 to $12,568,000 for the nine month period ended April
30, 2004 compared to the same period in the previous year. These increases are
primarily due to the significant growth in the U.S. AngioJet System product
sales.
For the three months ended April 30, 2004, gross profit improved by $3,504,000
to $14,548,000 compared to the same period in the previous year. This resulted
in a gross profit margin of 75% as a percentage of product sales. Gross margins
improved $9,007,000 to $39,813,000, or 76% as a percentage of product sales, for
the nine month period ended April 30, 2004 from the same period in the previous
year. This compares to gross margins as a percentage of product sales of 76% and
74% for the three and nine month periods ended April 30, 2003. The decrease in
gross margin rate for the three months ending April 30, 2004 was primarily due
to a one-time drive unit sales promotion with one of our group purchasing
14
organizations. The drive unit promotional program temporarily depressed our
gross margin rate by approximately 1.5%. Higher volumes of the XMI RX, XMI, XVG
and Xpeedior catheters drove the improvement in gross margin dollars in the
three and nine months ended April 30, 2004 compared to the same period in the
previous fiscal year. The Company believes that gross margins as a percent of
sales will be in the mid seventies for the remainder of fiscal 2004.
Selling, General and Administrative Expense
Selling, general and administrative expense increased $1,393,000 to $7,379,000
for the three months ended April 30, 2004 and increased $3,428,000 to
$20,754,000 for the nine months ended April 30, 2004, compared to the same
periods in the previous year. The primary factors in the expense increase for
the three months ended April 30, 2004 were the $360,000 in additional expenses
associated with the growth in the sales force, increased overall compensation,
contract labor and fringe benefits of $370,000, an increase in sales conventions
of $180,000, increased marketing fees of $167,000 paid to our purchasing groups,
increased sales demos and sales samples of $153,000, increase in patent expense
of $113,000, an increase in computer hardware of $108,000 and an increase in
outside services of $101,000. This expense increase was partially offset by
reduction in patient enrollment associated with marketing clinical trials of
$283,000. The primary factors for the expense increase for the nine months ended
April 30, 2004 were the $1,080,000 in additional expenses associated with the
growth in the sales force, increased sales incentives of $167,000, increased
overall compensation and fringe benefits of $533,000, increased patient
enrollment and outside service expenses of $300,000 associated with marketing
clinical studies, increased marketing fees of $319,000 paid to our purchasing
groups, increased outside services of $277,000, increase in convention expenses
of $212,000, increase in sales materials of $119,000, increase in sales demos of
$102,000, increase in patent expenses of $144,000, increase in computer hardware
of $123,000 and an increase in product liability insurance premiums of $111,000.
This increase was partially offset by a reduction of computer and software
depreciation of $312,000 and a reduction in health insurance of $117,000.
Research and Development Expense
Research and development expense increased $180,000 to $2,409,000, in the three
months ended April 30, 2004, when compared to the same period in the prior year.
Research and development expense increased $1,594,000 to $6,515,000 in the nine
months ended April 30, 2004. The increases were largely due to the timing of
expenses incurred for various research and development projects including the
new drive unit, an associated project to combine the pump and catheter, and
projects relating to the [improvement of the] rapid exchange catheter, the
distal occlusion guidewires and the power pulse spray projects.
Interest Income
Interest income increased $106,000 in the three months ended April 30, 2004 to
$198,000, when compared to the same period in the prior year. Interest income
increased $299,000 in the nine months ended April 30, 2004, when compared to the
same period in the prior year. The increases were due to the investing of excess
cash in an enhanced cash management portfolio of marketable securities. The
Company expects interest income to increase in fiscal 2004 as compared to fiscal
2003 as cash is generated from operations.
15
Provision For Income Taxes
The Company recorded a provision for income taxes of $1,862,000 and $1,097,000
or approximately 37.5% of income before income taxes for the three months ended
April 30, 2004 and 2003, respectively. The Company recorded a provision for
income taxes of $4,888,000 and $3,294,000 or 37.5% of income before income taxes
for the nine months ended April 30, 2004 and 2003, respectively.
The Company became profitable in the third quarter of fiscal 2001 and has
maintained profitability since. Prior to the fourth quarter of fiscal 2002, the
Company reduced its net deferred tax asset to zero through a valuation allowance
due to the uncertainty of realizing such asset. In the fourth quarters of fiscal
2003 and 2002, the Company reassessed the likelihood that the deferred tax asset
will be recovered from future taxable income. Due to the previous two full
years' operating results projected forward, the Company reduced its valuation
allowance on the deferred tax asset by $9,778,000 and $13,713,000 during the
fourth quarters of fiscal 2003 and 2002, respectively. These amounts are offset
by changes in temporary differences. In fiscal 2003 and 2002, the Company
increased the deferred tax asset by an additional $2,777,000 and $743,000,
respectively. These increases were related to tax benefit from disqualified
stock options that are recorded directly in the Consolidated Statement of
Changes in Shareholders' Equity. Management believes the remaining valuation
allowance is necessary as it is more likely than not that $740,000 of the
deferred tax asset will not be realizable due to the expiration of research and
development tax credits.
Liquidity and Capital Resources
The Company's cash, cash equivalents and marketable securities totaled
approximately $41,966,000 at April 30, 2004 versus $31,944,000 at July 31, 2003.
The $10,022,000 net increase in cash, cash equivalents and marketable securities
in the most recent nine-month period was primarily due to the net cash provided
by operating activities of $11,577,000. Net cash provided by operating
activities was primarily due to the net income of $8,141,000, depreciation of
$1,305,000, stock compensation expense of $133,000, a decrease in deferred tax
asset of $4,631,000 and an increase in accounts payables of $1,047,000. This net
cash provided by operating activities was partially offset by an increase in
accounts receivable of $1,941,000, an increase in inventory of $1,452,000 and a
decrease in accrued and other liabilities of $187,000. Depreciation includes
company-owned drive units at customer locations, as well as property and
equipment. The decrease in the deferred tax asset was due to the utilization of
the net operating loss carryovers to offset current taxes payable. The increase
in accounts payable was due to the timing of payments. Accounts receivable and
inventory increased to meet the increase in demand of the AngioJet System. The
decreases in accrued liabilities were due to the timing of payments. This
decrease included the payment of fiscal 2003 corporate incentives in September
2003. Cash used in investing activities was $9,531,000 including the net
purchase of marketable securities of $7,499,000 and the purchase of $2,088,000
of property and equipment. Net cash provided by financing activities was
$519,000, which resulted from the cash received in connection with the exercise
of stock options and warrants of $5,539,000, offset by the repurchase of 243,400
shares of the Company's stock in open market transactions for $5,020,000.
The Company expects its cash on hand and funds from operations to be sufficient
to cover both short-term and long-term operating requirements of its current
AngioJet business.
16
Off-Balance Sheet Obligations
The Company does not have any material off-balance-sheet arrangements.
Outlook
The Company expects overall revenue from the AngioJet System, primarily in the
United States, will be in the range of $71 million to $73 million in fiscal
2004. Gross margin as a percent of sales for fiscal 2004 is expected to be in
the mid seventies. The Company expects selling, general and administrative
expenses to continue increasing throughout the remainder of fiscal 2004 as a
result of the Company's expansion of its sales force to enhance market
penetration and to meet anticipated growth in revenue. Research and development
expenditures are expected to increase from the fiscal 2003 level as the Company
completes development of projects and invests in development of new AngioJet
System thrombectomy applications and related products including clinical trials.
The Company expects net income per diluted share for the full year in the range
of $0.58 to $0.62.
For fiscal 2005, the Company's preliminary guidance is to expect total revenue
in the range of $92-$98 million, with AngioJet revenue in the range of $90-$96
million. The upper end of the range will require that findings of the Company's
AiMI coronary clinical marketing trial, which we expect to announce in July or
August 2004, support increased utilization of the AngioJet System. The Company
projects full-year gross margins in the mid seventies, as a percent-of-sales.
Preliminary estimates for diluted EPS in fiscal 2005 are in the range of $0.83
to $0.96 per share, with the upper end of the range contingent on the impact
ofclinical results from AiMI. The Company expects to refine its guidance for
fiscal 2005 once it has fully analyzed and disclosed the AiMI results.
The Company expects that increasing working capital investments in trade
receivables and inventory will be required to support growing product sales. The
Company's primary source of cash is from its product sales. Collections of trade
receivables resulting from product sales are reviewed monthly to ensure that
customers are paying in a timely manner. The Company's use of cash is for
payment of normal trade accounts payable, capital equipment purchases, employee
compensation, stock repurchases and other normal business expenses, all on terms
that are customary in the industry. The Company is current with its vendors.
Forward-Looking Statements
Certain statements made in Management's Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this Form 10-Q are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995. The forward-looking statements relate to anticipated results
from the AiMI clinical marketing trial, physician customer response to trial
data, the Company's ability to increase sales of disposable product and capital
equipment in the face of new product introductions from competitors; the ability
to obtain additional regulatory approvals on a timely basis; the ability to
obtain regulatory clearance in new foreign markets; customer responses to the
Company's marketing strategies; the Company's ability to retain and motivate
skilled employees, especially for sales positions; the Company's ability to
expand the sales force; deferred tax asset valuation allowance; the Company's
outlook including future revenue, earnings, earnings per share and expense
levels; future equity financing needs; and the Company's ability to develop new
products and enhance existing ones. These forward-looking statements are based
on current expectations and assumptions and entail various risks and
uncertainties that could cause actual results to differ materially from those
expressed in such forward-looking statements. Certain factors that may affect
whether these anticipated results occur include clinical and market acceptance
17
of our products; factors affecting the health care industry such as restricting
sales time at interventional labs; consolidation, cost containment due to rising
expenditures on drug-eluting stents and trends toward managed care; changes in
supplier requirements by group purchasing organizations; unanticipated costs or
other difficulties and uncertainties associated with lengthy and costly new
product development and regulatory clearance processes; changes in governmental
laws and regulations; changes in reimbursement; the development of new
competitive products such as filterwires and compounds that may make our
products obsolete; sudden restrictions in supply of key materials; and
deterioration of general market and economic conditions.
We also caution you not to place undue reliance on forward-looking statements,
which speak only as of the date made. Any or all forward-looking statements in
this report and in any other public statements we make may turn out to be
inaccurate or false. They can be affected by inaccurate assumptions we might
make or by known or unknown risks and uncertainties. Except as required by
federal securities laws, we undertake no obligation to update any
forward-looking statement. A discussion of these and other factors that could
impact the Company's future results are set forth in the risk factors included
in Exhibit 99.1 to the Company's Form 10-K for the year ended July 31, 2003 as
filed with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company invests its excess cash in a professionally managed, institutional
fixed income portfolio of short duration. The market risk on a diversified
portfolio of relatively short duration is minimal, while enhancing returns above
money market levels.
The product sales for the Company's foreign subsidiary are in U.S. Dollars
("USD"). As of April 30, 2004, all of the Company's foreign bank accounts were
closed.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
- ------------------------------------------------
Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the "Exchange Act")). Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that, as of the
end of the period covered by this report, our disclosure controls and procedures
were adequately designed to ensure that information required to be disclosed by
us in the reports we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
applicable rules and forms.
Changes in internal control over financial reporting
- ----------------------------------------------------
During the fiscal quarter ended April 30, 2004, there has been no change in our
internal control over financial reporting (as defined in Rule 13a-15(f) or
15d-15(f) under the Exchange Act) that has materially affected, or are is likely
to materially affect, our internal control over financial reporting.
18
PART II. OTHER INFORMATION
ITEM 2 (e) STOCK REPURCHASE TABLE
RIDER TO Item 2(e) of Part II
- -------------------- -------------------------- -------------------------- -------------------------- ------------------------
Period (d) Maximum Number (or
Approximate Dollar
(c) Total Number of Value) of Shares that
Shares Purchased as Part May Yet Be Purchased
(a) Total Number of (b) Average Price Paid of Publicly Announced Under the Plans or
Shares Purchased (1) per Share Plans or Programs Programs (2)
- -------------------- -------------------------- -------------------------- -------------------------- ------------------------
February 1, 2004 to - - - -
February 29, 2004
- -------------------- -------------------------- -------------------------- -------------------------- ------------------------
March 1, 2004 to
March 31, 2004 66,800 $27.36 66,800 -
- -------------------- -------------------------- -------------------------- -------------------------- ------------------------
April 1, 2004 to
April 30, 2004 15,000 $26,56 15,000 $2,929,000
- -------------------- -------------------------- -------------------------- -------------------------- ------------------------
Total 81,800 $27.21 81,800 $2,929,000
- -------------------- -------------------------- -------------------------- -------------------------- ------------------------
(1) The Company repurchased an aggregate of 246,900 shares of its common
stock pursuant to the repurchase program that it publicly announced on
August 7, 2003, and 203,500 shares of its common stock pursuant to the
repurchase program that it publicly announced on March 24, 2004. The
shares were purchased in open market transactions.
(2) The board of directors approved the repurchase by the Company of
shares of the Company's common stock having a value of up to $4
million in the aggregate pursuant to the Program. The expiration date
of this Program is July 31, 2005. On March 24, 2004, the Company
announced the completion of its expended share repurchase program,
which was announced on August 7, 2004 and allowed the repurchase of
shares of the Company's common stock having a value of up to $4
million in the aggregate.
19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Certain of the following exhibits are incorporated by reference from prior
filings. The form with which each exhibit was filed and the date of filing are
indicated below.
Exhibit Description
- --------------------------------------------------------------------------------
3.1 Articles of incorporation as amended and restated to date
(incorporated by reference to Exhibit 3.1 of the Company's Annual
Report on Form 10-K for the fiscal year ended July 31, 1994.)
3.2 Bylaws as amended and restated to date (incorporated by reference
to Exhibit 3.2 of the Company's Annual Report on Form 10-K for
the fiscal year ended July 31, 1999.)
4.1 Rights Agreement, dated December 12, 1996, between the Company
and Norwest bank Minnesota, N.A., as rights agent (incorporated
by reference to Exhibit 1 of the Company's 8-A filed December 13,
1996.
31.1 Certification of the Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of the Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
The Company filed a Report on Form 8-K on February 18, 2004 under Items 7 and 12
reporting operating results for its second quarter ended January 31, 2004
earnings.
The Company filed a Report on Form 8-K on March 9, 2004 under Item 12 reporting
how kidney dialysis patients get hope with high-speed catheter system to remove
clots.
The Company filed a Report on Form 8-K on March 24, 2004 under Item 5 announcing
the authorization to repurchase an additional $4 million of the Company's common
stock.
The Company filed a Report on Form 8-K on April 21, 2004 under Item 5 reporting
it had signed a three-year distribution agreement with Angiometrx, Inc.
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POSSIS MEDICAL, INC.
DATE: June 14, 2004 BY: /s/ROBERT G. DUTCHER
------------------------------------
ROBERT G. DUTCHER
Chairman, President and
Chief Executive Officer
DATE: June 14, 2004 BY: /s/EAPEN CHACKO
------------------------------------
EAPEN CHACKO
Vice President of Finance and
Chief Financial Officer
21